The European Union's draft plan to label gas and nuclear plants as green investments risks causing confusion and misstated financial disclosures, expert advisers to the bloc said amid criticism of the proposal from some lawmakers and nations.
In feedback due to be published on Monday, the experts urged EU authorities to rewrite the draft rules, which they said would label gas plants with relatively high CO2 emissions as sustainable, as well as new nuclear plants launched too late to help meet the bloc's 2050 climate target.
The specialist advisers, whose views were reported in a leaked draft on Friday, said the proposal would make it hard for investors to assess which investments are truly climate-friendly — the question that the EU's "sustainable finance taxonomy" was designed to provide a clear answer on.
"The implication is the market will not be able to interpret what investments are truly aligned with the climate goals and which ones are not," Nathan Fabian, chair of the expert advisory panel, told Reuters. "It would lead to misstatements in financial disclosures."
"You'd see claims in financial products that your money is being invested in a sustainable way — but it's in a gas plant that's got above the European average emissions level," he added.
If the European Commission went ahead with the draft rules, the advisers said it should require companies and financial product issuers to single out gas and nuclear in their financial disclosures, rather than grouping them together with other green investments like electric cars or wind energy.
Tougher disclosures would be needed to avoid "greenwashing", the feedback said.
The EU taxonomy would not ban investments in assets that lack a green label.
But by badging climate-friendly investments as green, it aims to make them more attractive to investors.
EU countries and lawmakers disagree on whether gas and nuclear deserve a green badge. Germany rejected including nuclear in a letter to the EU, while four other states publicly opposed the Commission proposal last week.
Meanwhile, groups representing more than 200 of the European Parliament's 700 lawmakers sent letters to the Commission raising concerns.
Some are opposed to labelling gas and nuclear as sustainable, some are seeking rules to include more gas plants, and others are calling for a public consultation on the rules.
The Commission must now publish a final proposal for the rules. A majority of European Parliament lawmakers or a super-majority of EU countries — 20 of the 27 member states — could veto them.
